|

EUR/USD set to take 1.1000 amid US default woes and hawkish ECB bets, Eurozone CPI eyed

  • EUR/USD picks up bids to print mild gains while snapping three-day downtrend.
  • US debt ceiling expiration talks, relief from First Republic Bank woes join downbeat yields to weigh on US Dollar.
  • Euro cheers hawkish ECB talks despite mixed growth numbers as Eurozone HICP, CPI looms.
  • US Factory Orders, risk catalysts are also important for clear directions ahead of Fed, ECB monetary policy decisions.

EUR/USD cheers US Dollar’s retreat to snap a three-day downtrend near 1.0990 during early Tuesday morning in Europe. In doing so, the Euro pair also benefits from the market’s anxiety ahead of the key Eurozone inflation data amid the return of the bloc’s traders after a long weekend.

It’s worth mentioning that the talks surrounding the US default and hawkish Fed bets, as well as about China growth and the Sino-American tension, seem to challenge the market’s previously US Dollar positive bias. The reason could be linked to the European Central Bank (ECB) Officials’ readiness to keep the rate hike, as well as rejection of the recession woes even if the latest Gross Domestic Product (GDP) for Eurozone and Germany appear softer.

That said, US Treasury Department renewed fears of US default by pulling forward the date of running out of funds to match obligations if the current debt ceiling isn’t altered, to June 01 from previously signaled July. Following that, Reuters came out with the news suggesting the US Senate Majority Leader Chuck Schumer’s push for an expedited process to consider a clean two-year suspension of the federal debt ceiling. Further, chatters of US President Joe Biden’s call to four top US diplomats and arranging a meeting on May 09 also made rounds.

Elsewhere, a relief from the US First Republic Bank issue allowed traders to take a breather as the US regulators seized assets of the First Republic Bank and sold them to a new buyer, namely JP Morgan.

On the other hand, the latest statements from China Beige Book (CBB) suggesting that new data offer the first evidence of a truly robust 2023 recovery in the dragon nation, per analysts from CBB, seem to favor the EUR/USD optimists. However, Axios came out with headlines suggesting the US allies’ preparations for the US-China war over Taiwan, which in turn keeps the Euro bears hopeful, via the US Dollar’s haven demand.

It’s worth observing that Friday’s upbeat US inflation clues via Core PCE Price Index join Monday’s mostly firmer US PMI data to underpin hawkish bias about the Federal Reserve (Fed) and weigh on the sentiment. On the same line are the US inflation expectations, as per the 10-year and 5-year breakeven inflation rates from the St. Louis Federal Reserve (FRED) data.

Against this backdrop, S&P 500 Futures print mild losses after retreating from a three-month high, down 0.10% intraday near 4,182 by the press time. On the same line, the US 10-year and two-year Treasury bond yields retreat from a one-week high to 3.55% and 4.13% at the latest.

Looking ahead, German Retail Sales for March and the ECB Bank Landing Survey may entertain EUR/USD pair traders ahead of the first readings of the Eurozone’s key inflation gauge for April, namely Harmonized Index of Consumer Prices (HICP). Given the likely unchanged figures, any negative surprise won’t hesitate to recall the EUR/USD bears amid hawkish Fed bets. In that case, today’s US Factory Orders for March, expected to rise by 0.8% MoM versus -0.7% prior, can offer clear directions ahead of Wednesday’s FOMC and Thursday’s ECB monetary policy meetings.

Technical analysis

Despite the late rebound, EUR/USD keeps the previous day’s downside break of an upward-sloping support line from late March, now immediate resistance near 1.1010, which in turn joins downbeat oscillators to favor Euro pair sellers.

Additional important levels

Overview
Today last price1.0989
Today Daily Change0.0015
Today Daily Change %0.14
Today daily open1.0974
 
Trends
Daily SMA201.0969
Daily SMA501.0805
Daily SMA1001.0766
Daily SMA2001.0417
 
Levels
Previous Daily High1.1036
Previous Daily Low1.0964
Previous Weekly High1.1095
Previous Weekly Low1.0962
Previous Monthly High1.1095
Previous Monthly Low1.0788
Daily Fibonacci 38.2%1.0992
Daily Fibonacci 61.8%1.1008
Daily Pivot Point S11.0947
Daily Pivot Point S21.092
Daily Pivot Point S31.0876
Daily Pivot Point R11.1018
Daily Pivot Point R21.1062
Daily Pivot Point R31.1089

Author

Anil Panchal

Anil Panchal

FXStreet

Anil Panchal has nearly 15 years of experience in tracking financial markets. With a keen interest in macroeconomics, Anil aptly tracks global news/updates and stays well-informed about the global financial moves and their implications.

More from Anil Panchal
Share:

Editor's Picks

AUD/USD shows resilience below 38.2% Fibo. near mid-0.7100s

The AUD/USD pair touches a one-and-a-half-week low, around the 0.7140 region during the Asian session on Monday, though it lacks follow-through. Spot prices currently trade just above mid-0.7100s, down nearly 0.25% for the day.


USD/JPY: Japanese Yen edges lower vs USD amid Middle East jitters as Fed, BoJ meetings loom

The USD/JPY pair attracts some buyers at the start of a new week and climbs closer to the 154.00 mark during the Asian session, reversing a part of Friday's losses. Spot prices, however, remain confined in a range held over the past week or so and within striking distance of a nearly seven-month low, touched last Tuesday, as traders await this week's key central bank events.


Gold retests $4,300; USD losses momentum

Gold picks up fresh upside traction and challenges the key $4,300 mark per troy ounce on Monday. The yellow metal, however, remain on the back foot on the back of marked gains in the US Dollar and rising US Treasury yields across the curve.

Crypto Today: Bitcoin, Ethereum, XRP recover ahead of US Senate vote on CLARITY Act

Bitcoin edges higher, trading near $77,884 as of Monday, in tandem with broader gains across the cryptocurrency market. Ethereum and Ripple follow Bitcoin’s neutral-to-bullish trajectory, holding key support levels at $2,521 and $1.38, respectively.

Will the Fed deliver the hawkishness markets are pricing in?

Fed hike bets increase after PPI and CPI reports. Updated dot plot to be crucial for the dollar’s reaction. Warsh’s independence faces test amid Trump’s pressure for lower rates. For the Dollar to extend gains, Fed needs to satisfy current hawkish bets.


Venezuela’s 65-billion-barrel Oil deal could reshape America’s inflation fight
The United States (US) has secured unprecedented access to part of Venezuela’s vast Oil reserves. The timing is particularly significant as the war with Iran is disrupting Middle Eastern supplies, keeping energy prices elevated and reviving concerns about inflation.